SACRAMENTO (CN) – California’s Senate budget committee on Tuesday recommended the elimination of a top-loaded pension system that gives 30 high court bureaucrats a lavish 22 percent pension payment, all at taxpayer expense.
The budget committee strongly recommended that the top 30 executives of the Administrative Office of the Courts start contributing to their retirement like all other state employees, instead of having the taxpayers pay the entire pension contribution.
“Certainly those who are now getting a hundred percent, who may be among the higher paid employees, I think ought to be contributing the same as the average court workers,” said Senator Loni Hancock (D-Berkeley).
The committee put off a decision on the governor’s controversial proposal to wipe out the reserve funds held by individual trial courts to manage their bills. But it directed the governing body of the courts, the Judicial Council, to find $4 million in savings and gave the council a strong suggestion that the money should come through the elimination of the 22%, full-ride pension perk for the highly paid bureaucrats.
The lavish perk was put into jeopardy in Governor Jerry Brown’s May revised budget, where he recommended that all court employees contribute to their pensions. Federal law, for example, does not allow employers to top load pension plans and discriminate in favor of the most powerful and best paid employees.
However, state government employees in California are exempted from that law.
Referring to the full-ride pensions for the top 30, Anita Lee from the Legislative Analyst’s Office told the budget committee, “Our understanding is that for a small group of executives, that is currently being paid, but the proposal that is being put forward by The Department of Finance is that this will no longer be the case.”
Hancock from Berkeley answered, “I think that part of the proposal would be very good.”
On the separate issue of Brown’s proposal to sweep local trial court fund balances to help offset a $544 million budget cut to the judiciary, a number of judges urged the senators to reject that idea.
“The elimination of reserves, while it sounds like a good and convenient way to get money, is really a Trojan horse for a much more significant change to the way the branch is structured and operates,” testified Judge David Rubin, president of the California Judges Association.
Judges from all over the state see the taking of their fund balances and creating one big statewide reserve pot as a frightening move toward stripping them of their ability to independently manage their local court finances. Judges are also wary of having to beg for emergency funds from the Judicial Council, the body that would be put in charge of administering the statewide reserve.
Michael Cohen, the chief deputy director of the state’s Department of Finance hinted in his testimony that control of the statewide reserve would actually rest with the Administrative Office of the Courts, a proposal that is anathema to many trial judges. The same office was responsible for an IT project that wasted a half-billion dollars before the project was terminated last month.
“We think at a time when we’re making many difficult budget cut proposals, it makes sense to spend down the local reserve amounts,” said Cohen. “Replace it with a statewide reserve equal to three percent of expenditures, roughly 80 percent, that the Administrative Office of the Courts will have the ability to allocate to take care of any unexpected needs.”
Presiding Judge Laurie Earl of Sacramento urged the legislators not to deprive the courts of the ability to manage their reserves — funds that most courts have already committed in order to see them through the year.
“Having an emergency fund rest in the control of the Judicial Council, in which every court must run hat in hand when seeking permission to pay workman’s compensation claims or local infrastructure needs will hardly be productive or equitable,” Earl said. “Those funds must be left with individual trial courts who have demonstrated fiscal responsibility in accumulating these funds to begin with. Anything less would cripple us.”
Lee from the Legislative Analyst’s Office also urged the committee to reject the proposal to sweep the reserves.
“It is a significant policy change that raises a number of questions about the role of the state and the Judicial Council versus the local trial courts in making fiscal and programmatic priority decisions,” she said.
Cohen from the governor’s Deparment of Finance was pressed by Senator Hancock to defend his department’s recommendation in favor of a statewide reserve controlled by the central bureaucracy.
“How do you see a situation in which the courts that worked hard to be creative, to streamline operations to keep a reserve, will lose their reserves, and the other piece of that, are there efficiencies in establishing a statewide reserve really, or does it add another layer of bureaucracy?” asked Hancock.
Cohen replied, “Right now you’ve got 58 different court systems in 58 different places and moving to a statewide reserve would help create a more standard approach to dealing with these types of reductions.” But he then added, “There certainly will be some challenge in a transition, no doubt.”
Though the committee decided to hold open the issue for a couple of weeks, the senators showed skepticism regarding the effectiveness of requiring courts to spend down their fund balances.
“I too have concerns about this recommendation involving the reserves,” said Senator Lois Wolk (D-Stockton). “The use it or lose it mentality is not a good management strategy.”
In a press release Tuesday evening, the reform group Alliance of California Judges said, “We believe it is important that all trial judges understand that it was the AOC that provided the governor with the information concerning the status of trial court reserves. You can access that report here.”
“We all know that many of these ‘reserves’ are encumbered or otherwise spent. We hope that the highly paid staff in the AOC Office of Governmental Affairs clearly explained the encumbered status of these reserves to the Governor’s Office,” said the statement, betraying a hint of sarcasm. “You may recall that this same staff drafted a bill just a couple of years ago that would have eliminated our right to elect our presiding judges.”
The Alliance statement also pointed out that California statutes gives the Judicial Council and the administrative office the ability to put in receivership any court that spends beyond its allocation.
“In light of the fact that our reserves will be swept,” said the statement, “this potential should concern every judge who believes that the council and AOC already wield too much power.”